Partners and Partnerships — International Tax Aspects (Portfolio 910)

The key issues addressed in this Portfolio include:

• When is an entity classified as a partnership for U.S. tax purposes? Planning considerations in choosing the appropriate business form for international operations.
• What is the distinction under the Internal Revenue Code between domestic and foreign partnerships, and between resident and nonresident partnerships? Analysis of the significance of these distinctions in structuring international joint ventures.
• How does the U.S. tax system treat inbound investment by a foreign person through a U.S. resident partnership? Consideration of the principal tax issues that arise on formation, operation and wind-up of joint venture. Also analysis of the tax consequences of a foreign person’s sale or other disposition of his equity interest in a joint venture.
• What are the principal tax considerations for U.S. persons conducting foreign operations through an entity treated as a partnership for U.S. tax purposes? Special attention is given to former §1491, the replacement provisions and planning considerations for U.S. taxpayers seeking to contribute appreciated assets, or intangible assets, to foreign joint ventures. Also discussed is the interplay of the partnership rules and various rules affecting the taxation of foreign income of U.S. taxpayers, including the income source rules, the foreign tax credit and subpart F.
• How do the withholding rules apply to domestic and foreign partnerships
• How do bilateral tax treaties apply to domestic and foreign partnerships and their partners
• What are the obligations of resident partnerships with foreign partners, and nonresident partnerships with U.S. partners, to file informational returns with the IRS?

Table of Contents

I. Introduction
II. Classification
III. Distinguishing Between Domestic and Foreign Partnerships and Between Resident and Nonresident Partnerships
IV. U.S. Taxation of Inbound Investment in Partnership Form
V. Outbound Investment in Partnership Form
VI. Withholding
VII. Treaties
VIII. Returns